Slicing Up The Royalty Pie: The opportunities and challenges of multi-credit copyrights

The following is a guest post from Benom Plumb. He is the Assistant Professor of Music Industry Studies at the University of Colorado Denver and former music publisher. He is not an attorney.

Music publishers and their advocates are pressuring streaming music services to add songwriter credits to their track listings.

Unfortunately, the state of music collaboration today makes that extremely difficult, as Saturday Night Live recently called this out in spectacular fashion.

This isn’t too far from the mark. When I was a music publisher, I worked on a license for a hip-hop track that had somewhere in the ballpark of 17 writers and 20+ music publishers. That’s not an exaggeration.

Accounting for royalty splits between them all was a nightmare. Someone literally had a 1.17% share of the song. What’s more, the total shares added up to over 100%. If all of the shares add up to over 100%, guess what? No one is getting paid!

Licenses can’t be issued and the royalty payees will hold funds until this kind of conflict is resolved. Sometime it results in an indefinite hold on all royalty payments.

See when artists collaborate, the intention is to merge the contribution of each into one “whole” work. That means everyone will have a piece of a 100% royalty pie. One industry practice says the music is worth 50% (chords, melody, arrangement, etc.) and the lyrics are worth 50%. Elton John and Bernie Taupin are good examples: Elton writes the music (50%) and Bernie writes the lyrics (50%).

But when you have 17 writers whose total shares equal over 100% of the whole work, there’s a problem. Sometimes the entire song is thrown into a type of internal escrow account and none of the parties are paid until all shares equal 100%. Other times, the claimants that are not involved in the conflict will continue to get paid their pro-rata share of royalties and only the conflicting shares are held in the escrow.

The most common cause of these conflicts is typically some kind of clerical error after a party registers their royalty claim. Again… easy to fix with two writers; harder with 17. And if a song incorporates samples from other songs, there is often confusion on who gets what from the sampled track vs. the new track incorporating the sample. Unfortunately, sometimes the conflict is a malicious action to claim more royalties than is legal.

To prevent this sort of mess, people must practice good record keeping and organize supporting documentation. Make sure you have a documented, internal decision among all parties on the royalty claims. There are a number of new services emerging to help songwriters with this, including Auddly, Tunedly, and Songistry.

When an artist or writer is signed to a company, they are usually required to complete and sign a document called a “split sheet.” This document, filled out for every new work, is especially important for multi-credit tracks. It essentially lists the names of all the writers and contributors, their claimed shares, affiliated companies (publishing or otherwise), royalty collection societies (ASCAP, BMI, SESAC, GMR), contact info, etc.

The same kind of documentation is necessary whenever royalty or copyright portions are purchased. If one of the creators sells off a piece of their royalties or copyright, ideally there should be copies of copyright registrations, split sheets, agreements, licenses, etc. That way, no matter how copyrights or royalty interests change hands, the supporting documentation can easily resolve any conflicts.

Absent a signed document, the default is typically equal percentage splits. This means that if five people wrote a song together, everyone gets 20% no matter the contribution of each.

The process of deciding splits can be a music industry cultural thing. For example, the Nashville culture pretty much follows the “equal split” model. But other scenes count up notes, lines, chords, etc. and can follow a more exhaustive and meticulous model for finalizing royalty splits. (I assume that’s how someone ends up with 1.17%?)

Surprisingly, conflicting royalty claims are so painfully common in the industry they rarely ever go to legal action in court. I handled many conflicting claims and almost all of them were resolved by providing supporting documentation and having a good faith dialogue.

So no matter who you are in this process - creator, owner or investor - always have the paper trail to support the royalty claim on multi-credit works. Maybe once we get our own house in order on songwriter credits, we can then argue more forcefully for digital music services to do the same.

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